In recent weeks, large parts of Iran have witnessed widespread electricity blackouts. The blackouts have peaked again, and now, as the weather warms up, there is talk of wider and longer blackouts in Iranian cities.
Power outages in the cities of the world’s largest energy superpower
Iran has the second-largest natural gas reserves in the world and the amount of domestic gas production and consumption is very high. On the other hand, with an installed power plant capacity of nearly 85,000 MW, Iran is one of the 15 largest generators of electricity in the world. Accordingly, Iran generates even more electricity from more populous countries (such as Indonesia and Egypt) and more developed countries (such as Mexico).
But why does Iran, as an ‘energy superpower’ that ranks next to countries such as Russia, Saudi Arabia, Venezuela, Canada, and the United States, cut off electricity in both summer and winter?
There is a lot to be said about this. First, Iran has the highest rate of ‘energy intensity in the world. Simply put, Iran consumes more energy than any other country in the world but produces the lowest gross domestic product (GDP) per unit of energy consumed.
But that is not all. First, Iran’s electricity grid is severely worn out, and a lack of investment over the years has resulted in the loss of much of the energy in the transmission lines. In addition, evidence shows that despite warnings, cryptocurrency mining continues and puts severe pressure on Iran’s electricity grid. Currently, the consumption of unauthorized cryptocurrency mining is about 2,000 megawatts.
Another example of wasted energy is the so-called residential towers ‘Maskan-e-Mehr’ that even in hot provinces, despite a large amount of land, towers up to ten floors have been built in which energy insulation, which is the subject of Article 19 of the National Building Code, has not been observed. Coolers, firstly, impose reactive power on the network and increase losses, and secondly, they have greatly increased the home load of the network, so that the peak load of the network has been transferred from nighttime to daytime.
But to know how much energy is wasted in Iran, we must refer to some shocking global statistics. According to the International Energy Agency, in 2019, Iran allocated about 18.8% of its gross domestic product (GDP) to subsidize fossil fuel consumption, and in this regard, in holds first place in the world.
Thus, according to the report of the International Energy Agency, Iran alone has paid about 47% of the total subsidy allocated to the consumption of fossil fuels in the world in 2019.
Some 18.8% of Iran’s GDP in 2019 (before the coronavirus epidemic) was equivalent to about $86 billion. Considering 25,000 Tomans for each dollar, this amount will be equivalent to more than 2 thousand trillion Tomans.
And there are reasons for such a situation too. One of them is because of wrong administration. In the years of Ahmadinejad’s government and even after that, unfortunately, the use of managers without relevant expertise in this industry has grown increasingly, who are weak and lacking in decisions. For example, the CEO of Tehran Distribution Company was transferred from a security position to the CEO of this company, and a few days ago he was forced to resign. And the CEO of the parent company specialized in thermal power generation is a theolog graduate of Imam Sadegh University with a focus on Islamic economics.
Another reason is the country’s backwardness is the lack of investment in renewable energy by the parliament and the government, which has deprived the country of clean and cheap energy.
Can’t be this situation be managed?
Aside from these fundamental problems, is it possible to manage the current situation, at least until the end of the summer of 2021?
Just a few days ago, Gholam-Ali Rakhshani Mehr, Secretary of the Board of Directors of the peak of the electricity industry, said about the widespread blackouts in the country:
“About 24,000 MW of electricity produced in the country is allocated to cooling devices, and the peak of electricity consumption occurs between 12 and 18 o’clock. If we assume that this peak load occurs for three months, we have a peak consumption of about 450 hours per year, and to meet this consumption need, 7,000 to 8,000 MW power plant must be built.”
The largest conventional power plants in Iran have a capacity of about 2,000 megawatts, and thus, if we consider the words of this official, Iran will need to build four new power plants to get rid of the summer blackouts in the summer of 2021.
Just a few days ago, Hamid Reza Salehi, the head of the Energy Commission of the Iran Chamber, in an interview with the state-run news website ‘Fararo’, while pointing to the increasing possibility of blackouts in the country, said:
“Due to the lack of investment in the construction of power plants in recent years, power plants are under a lot of pressure, and unfortunately due to the approach was taken by the government, no new investment has been made in the construction of power plants, while according to official statistics, 8% of the country’s electricity consumption is increased annually.”
He continued: “The nominal capacity of electricity production in the country is 85,000 MW per day, while according to the Sixth Development Plan, 5,000 MW per year was to be added to the country’s production capacity. On the other hand, due to the existing problems, the current electricity generation capacity in the country is 60,000 MW per day.
“At present, the government buys between 50 and 60 tomans per kilowatt of electricity from power plants. On the other hand, the person who built the power plant must pay its foreign currency loan installments to the National Development Fund on time.
“Consider a power plant that generates 3 billion kilowatt-hours of electricity per year, and if we consider the purchase price of each kilowatt of electricity by the government between 50 and 60 tomans, the total revenue of the power plant will be 150 billion tomans per year. Meanwhile, the foreign currency loan of the power plant amounts to 52 million Euros, which is equivalent to 1500 billion Tomans, and must be returned to the National Development Fund.
“In practice, with such income and expenditure, the electricity industry cannot survive, and the output of this issue is the situation that we see in blackouts.”